Global Economic Growth Is Weak And Cotton Supply Will Be Surplus In The Second Half Of The Year.

Since July, the price of US cotton has continued to decline, dropping to 62.6 cents / pound in July 12th, and then oscillating near 63 cents / pound. Zheng cotton fell in July 9th, and in July 10th, the main contract of zhengmian fell to the lowest level, and then oscillated at 13000 yuan / ton.

Global output increase next year


The US Department of Agriculture issued the global cotton production and demand forecast in July, raising the global initial inventory of 380 thousand tons, increasing the global output by 100 thousand tons, while reducing the global usage of 210 thousand tons, and reducing the import and export volume of 130 thousand tons. In the year of 2019/2020, there was an oversupply of cotton in the world, and the final inventory was expected to increase by 690 thousand tons. The initial increase in global cotton stocks is mainly due to the reduction of cotton consumption in Bangladesh and China.


The increase in cotton production in the next year has played an important role in increasing cotton production in the world, and the US cotton planting situation has also confirmed its expected increase in output. 20%. As of July 14th, the growth rate of US cotton was slightly behind that of previous years, but overall growth was good. The excellent and good rate was 56%, up from 41% in the same period last year. Last week's rainfall and recent warm and sunny weather in Texas are conducive to cotton growth.


The inventory is still slow.


The average price of the national cotton store has declined. The 3128 price has dropped from 14640 yuan / ton in July 1st to 13824 yuan / ton on 19 days. Although the turnover rate has been slightly decreased by the mood of the disk, it has remained at 90%. Domestic supply is adequate in 2018/2019, and the year-end inventory is expected to increase substantially over the same period. Up to the beginning of July, 1 million 400 thousand tons of new cotton had not yet been sold in southern Xinjiang, and Xinjiang cotton, which did not sell at the end of August, was under pressure to repay, which would put pressure on cotton prices.


The latest data released by the General Administration of Customs showed that the export of textiles was not good in June. In June, the export of textile yarns, fabrics and products was 10 billion 310 million US dollars, down 3.9% compared with the same period last year. The cumulative value of that year increased by 0.54%, and the export garments and accessories 14 billion 340 million dollars, down 0.93% compared with the same period last year. The cumulative value of that year decreased by 5.1%. At present, there are a small number of replenishment banks in the textile industry, but the accumulated inventory in the previous stages is still slow, and a slight improvement in the downstream transactions is not enough to counter the downward pressure on prices.


Global cotton production growth probability


At present, the probability of global cotton production growth is large, while the global economic growth is weak, and textile consumption is expected to decline. By the end of July, China's industrial and commercial inventory is estimated to be about 4 million 750 thousand tons, an increase of about 970 thousand tons over the same period. Futures warehouse receipts plus a total of 15400 forecast, about 610 thousand tons of cotton, but also to bring greater pressure on the disk. Therefore, Zheng cotton market will still maintain a weak pattern, which may run in the range of 12700 to 14000 yuan / ton in the short term.


It should be noted that if the Sino US economic and trade consultations can make substantial progress, they will be able to stabilize the downstream sentiment very well and the order will also increase. In addition, the entry of national cotton stores and unfavorable weather in Xinjiang will have a significant impact on the cotton balance sheet.